Get ready to pay more for preferred air seats, check-in-luggage & meals

Virtually adopting the U.S. model of imposing extra fee on air passengers, the Civil Aviation Ministry on Monday allowed airlines to charge extra money from passengers for preferred seats, check-in baggage and meals, among other things.
Civil Aviation Minister Ajit Singh has decided to permit scheduled airlines to unbundle certain services and to charge fees for them separately. The services include snacks, drinks (barring drinking water), use of airline lounges, and transport of sports equipment, musical instruments and valuable baggage which have higher carrier liability, says an official statement.This practice was adopted in 2008 by some U.S. carriers which were facing a financial crunch. Their decision to charge money for even the first checked-in baggage received flak from travellers but the practice still continues, generating revenue worth millions of dollars to the airlines.Monday’s statement said the Minister's decision was based on the recommendations of an independent consultant, who opined that unbundling of services became necessary for exercising more control over operational costs and running a successful airline. The objective was to facilitate airlines to offer low base fare for price sensitive travellers and, at the same time, provide a choice to service seekers at a price.The decision would allow passengers to benefit from lower base fares and customise the product to better suit their requirements and budget, while allowing airlines to develop more sustainable operations in an environment of wafer-thin margins, the statement noted.
The airlines would have to file details of services to be unbundled and fees to be charged to the Directorate General of Civil Aviation. “DGCA may not fix fee for unbundled services but shall have the right to intervene and stop charging if regulatory principles are violated by the airlines.”The statement said the airlines would have to maintain transparency and inform the travelling public and agents of what fee they were charging and for which of the unbundled services. The charges would be a fixed amount and announced well in advance by the airlines. These shall not vary with the base fare for a particular flight. Customers should be given the opportunity to pick and choose amenities they want to receive and pay for.
http://www.thehindu.com/todays-paper/get-ready-to-pay-more-for-preferred-air-seats-checkinluggage-meals/article4668544.ece

Gopinath puts airline application on hold, to watch AirAsia India fate first

The founder of low cost flying in India — Captain G R Gopinath of Air Deccan fame — has decided to keep his application for launching a new budget airline here on hold. The ex-armyman will first see the fate of the AirAsia-Tata Sons joint venture startup's fate before moving with his papers. After getting Foreign Investment Promotion Board nod, AirAsia on Tuesday filed a formal application with the aviation ministry to seek clearance for starting the Indian subsidiary. The airline plans to start operations with three to four planes and take the number to 37 in next five years. "The aviation ministry feels that last September when the government relaxed foreign direct investment in the sector, it allowed foreign airlines to invest in local ones. So the government will have to clarify that even start-ups are allowed under the relaxed FDI norms," said sources.
Now, Gopinath is waiting to see the fate of the AirAsia joint venture that is backed by the Tatas with former group chairman Ratan Tata taking personal interest in the project because of his passion for aviation.
"If the aviation ministry stalls or even delays such a formidable combination, then what chance does Gopinath have? So he has decided to wait and watch," said sources.
The aviation ministry has already not shown any interest in Gopinath's proposal to start a new airline with minister Ajit Singh saying that Deccan already has a regional airline licence and should operate that first. "Let him first run that well and then that licence can be extended to a national one," the minister said recently.
The founder of Air Deccan, which was acquired by Kingfisher Airlines chief Vijay Mallya in 2007 for Rs 550 crore, is learnt to have tied up with a foreign airline for his proposed new venture. Aviation ministry top brass points out to the less than favorable commercial success of his aviation ventures like Air Deccan, cargo airline and charter company.
However, free market advocates question this approach by the ministry. "Aviation is a free market. Entrepreneurs are free to launch ventures. If they succeed, good for them, otherwise their fate would be that of Kingfisher's. The government should not pre-judge the fate of a proposed venture to disallow it from even starting," said an airline official.
http://timesofindia.indiatimes.com/business/india-business/Gopinath-puts-airline-application-on-hold-to-watch-AirAsia-India-fate-first/articleshow/19777665.cms

Naresh Goyal rejigs Jet holding structure

: Jet Airways owner Naresh Goyal will rejig the shareholding structure to accommodate his proposed new partner, Etihad Airways. Goyal's Tail Winds, which holds almost 80% of Jet Airways, will transfer a majority of its stake to the founder and will divest a 5% stake to meet Sebi's 25% public float requirements, Jet Airways said in a statement to the stock exchange.
 To comply with the Sebi norms, Tail Winds, an overseas corporate body (OCB) registered in the tax haven of Isle of Man, will seek RBI and FIPB approval. The permission is important as India has derecognized OCBs as a separate class of investor since 2003. And so, these entities can't sell or purchase shares or convertible debentures but could hold such securities and debt instruments if the same were bought before the new rule came into force. The share transfer is expected to have no tax implications as there is no sale taking place between Tail Winds and Goyal, said industry observers.Jet Airways didn't mention the time-frame for selling the additional shares to public but Sebi has set a June-end deadline for complying with the public shareholding norms. Funds and other investors currently hold a 20% stake in Jet Airways, whose shares on Monday closed at Rs 609.60 on the BSE. At this price, the additional 5% stake is worth about Rs 265 crore.
 Tail Winds will divest 5% through offer-for-sale , the preferred route of companies to meet the public shareholding guidelines. India's second largest carrier by market share has called for a shareholders meeting on May 24 to seek their approval on Etihad's proposed Rs 2,058 crore investment in Jet Airways, which would give the Abu Dhabi carrier a 24% stake in the over two-decade old firm. The deal with Etihad will take place after the divestment and share transfer exercise. Jet intends to use the money to repay high cost debt and improve its earnings.
 Etihad will get three seats on the board of Jet Airways and the stake purchase by UAE's national airline will not result in a change of control of the company, the Mumbai-based carrier said. It is learned that Etihad will not have any veto rights.
 Once the entire transaction is over, Tail Winds will no longer hold any shares in Jet Airways and that Goyal will hold controlling stake of 51% in the company, the Jet Airways statement said.
 Conforming to norms
 Naresh Goyal's Tail Winds is an overseas corporate body (OCB) registered in the tax haven of Isle of Man.
 It will transfer most of the 80% stake in Jet Airways to the founder and will divest 5% after taking RBI & FIPB's approvals The clearance is vital as OCBs were derecognized as an investor class in 2003, so they can't buy/sell shares unless they're held before that date.
http://timesofindia.indiatimes.com/business/india-business/Naresh-Goyal-rejigs-Jet-holding-structure/articleshow/19793855.cms
 

Qatar Air, Arabia may be next to invest

: Gulf carriers Qatar Airways and Air Arabia are learnt to be next in line to invest in India after Etihad decided to pick up a 24% stake in Jet Airways for Rs 2,058 crore last week.
 Qatar is learnt to be looking at investing in an existing Indian carrier with SpiceJet and GoAir being the frontrunners . IndiGo continues to tease investors with its most eligible and sought after status but has so far not shown any interest in selling stake to them.
 Highly-placed sources said grounded Kingfisher Airlines also tried to woo Qatar Airways . Sharjah-based LCC (low-cost-carrier ) Air Arabia is learnt to be looking at tying up with an Indian partner for investing in a start-up like AirAsia India JV between the Malaysian budget carrier and the Tata Group."The fight for carrying the growing traffic between India and the West — including Australia , New Zealand and some other far east destinations — has shifted to the Gulf. Air India is the only desi carrier that is hit by the emergence of Gulf carriers as the de facto national airlines of India. European carriers are also going to be hit. Indian LCCs are not that badly hit as their Gulf flights only will be affected somewhat ," said an airline official.
 The Jet-Etihad deal has led to India granting massive flying rights between India and Abu Dhabi, giving a push to Etihad, which in 2011-12 did not even figure in the top 10 airlines in terms of transporting people between India and rest of the world. This despite the fact that five of the airlines in the top 10 list were from the Gulf, led by Emirates and then Qatar, Air Arabia, Saudi Arabian and Oman Air. While Emirates holds the number one or two slot when it comes to flying people in and out of India, Qatar and Air Arabia figured in top five airlines in 2010-11 .
 "The problem was for Etihad as it could not get more capacity to India and increase its market share. The Jet deal will catapult it to the top and make it compete directly with Emirates . Qatar could also follow the same route," said industry sources. While Emirates has 185 flights a week from 10 cities , Qatar has 95 flights per week from 12 cities and Etihad has 63 flights a week to nine cities , a figure which will be ramped up fast.
http://timesofindia.indiatimes.com/business/india-business/Qatar-Air-Arabia-may-be-next-to-invest/articleshow/19793743.cms

Air travel to cost more as airlines freed to charge extra for services

Air travel is all set to cost more as Indian carriers — like their foreign counterparts — are now free to charge passengers extra for almost every service.
 The aviation ministry on Monday allowed airlines to 'unbundle' services —meaning charge extra for blocking seats in advance, check-in baggage, and carrying sports and musical equipment or high value baggage. The list of items allowed for extra charge by aviation minister Ajit Singh will be reviewed in six months.Fallout of this order could be reduced free check-in weight. Domestic flyers are presently allowed to check-in 20 kg and airlines have been planning to reduce this to 15 kg. Airlines have been planning to hike excess baggage charge too, which means a double whammy for flyers.Eco class flyers can use lounges for a feeWhile almost all low cost carriers (LCC) and some full service ones were in favour of reducing free baggage limit, they were waiting for DGCA to first allow pre-booking of seat charges.
 Airlines have now been allowed to allow economy class passengers use their lounges for a fee apart from the common practice of onboard sale of food and beverages, except drinking water in cups (not the bottled variety) which has to be given free. Airlines are going to almost immediately start charging for pre-booking of seats as they had started doing so about three years backed and were stopped by the Directorate General of Civil Aviation (DGCA) in early 2012. They had then petitioned the DGCA to be allowed to resume charges for this facility. After keeping the global example in mind, the regulator is learnt to have permitted this charge.
 "Our application for resuming pre-booking seat charges was lying with aviation authorities for years. When AirAsia's application for starting an airline here was cleared, we knew the move will get a push as foreign LCCs are famous for unbundling services and charging extra for everything. AirAsia on its international flights does not allow any free check-in baggage. Now the global LCC model will truly come to India," said an airline official, emphasizing that all carriers need to boost their ancillary revenues to keep base fares competitive.
 An aviation ministry statement said unbundling services and charging for them extra "has become a necessary aspect of exercising more control over operational costs and running a successful airline."
 The ministry has asked airlines to have fixed charge for services and not change them like airfares for different flights. The DGCA shall monitor the charges. Airlines will have to file details of services to be unbundled and their charges to the DGCA.
http://timesofindia.indiatimes.com/business/india-business/Air-travel-to-cost-more-as-airlines-freed-to-charge-extra-for-services/articleshow/19793961.cms
 

Jet's borrowing cost Etihad extends soft loan worth $300 million to Jet Airways to reduce

MUMBAI: Cash-rich Middle-Eastern airline Etihad has extended a low-interest loan of $300 million to Jet Airways, a sweetener that will help the debt-laden domestic carrier reduce its borrowing costs.The loan has been offered at a jaw-dropping rate of 3%, and could lead to sizeable savings for Jet, a company official said. "We'll save about $30 million annually on interest alone," the official added. The airline now pays an average annual rate of 14%. Jet will use the money to partially replace its high-cost loans. The airline had a debt of $2.1 billion at the end of December 2012 and is paying an annual interest of about 1,000 crore.
 Meanwhile, the company announced the details of its preferential allotment plan to Etihad to the stock exchanges, and said Etihad will be allotted three seats on Jet's board. Tailwinds, the Isle of Man company promoted by Naresh Goyal, has also transferred its holding in Jet AirwaysBSE 1.79 % to Goyal, paving the way for the airline to increase its public shareholding by 5% in line with the country's capital market regulations. A Jet official said road shows are going on and the offer for sale will be completed by the end of the month. Indian aviation regulations do not permit foreign equity to be more than 49%. Goyal is an NRI and his personal holding is not considered as foreign equity.
 "The deal comes as a big boost for Jet Airways. It is not just about equity infusion but also network expansion and top-line growth. It will help lighten Jet's debt burden of around 12,000 crore and its large current liabilities," says Amber Dubey, partner and head of aviation at global consultancy KPMG.
 The $300-million loan will be in addition to the $600 million the Abu Dhabi-based airline has forked out for the 24% stake, the Heathrow slots owned by Jet, and the purchase of the airline's frequent flier programme. Etihad will be facilitating this loan through their bankers, and we'll securitise our accruals to repay the five-year loan, a Jet official said.
 "The loan is likely to be extended through Etihad's bankers," a source with direct knowledge of the deal told ET. The name of the bank was not immediately available as the deal is still to be put in place.
 Debt along with the purchase of an equity stake is not unusual in international aviation deals. Etihad had lent $263 million to Air Berlin when it bought a stake in the German carrier sometime back.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/etihad-extends-soft-loan-worth-300-million-to-jet-airways-to-reduce-jets-borrowing-cost/articleshow/19789769.cms

Global airline sector profit likely to reach $7.5 bn in 2013’

Global airline sector profit is likely to grow to $7.5 billion this year, with Asia Pacific and West Asia based airlines dominating the international passenger market and leading the way in terms of improved operating margins, according to IATA data.
 This is compared to $4.6 billion worth of profit recorded in 2009, the International Air Transport Association (IATA) report said.
 “The world passenger growth in air traffic is recorded at 5 per cent per annum (CAGR) by ICAO scheduled traffic analysis since 1980,” said Sunil Malhotra, Director, Aviation Sector MENA, Ernst & Young who spoke on Global Aviation trends, quoting IATA figures.
 According to IATA, global airline sector profit will grow from $4.6 billion in 2009 to a forecast figure of $7.5 billion for 2013 with Asia Pacific and West Asia based airlines dominating the international passenger market and leading the way in terms of improved operating margins, he said.
 Malhotra will present the latest industry findings and a 10-year outlook with a session entitled ‘Looking to the skies: global aviation trends 2013-2033’ at the Arabian Travel Market (ATM) exhibition here next month.“According to the report, Asia-Pacific will lead world traffic by 2031, with a 32 per cent share, while the Middle East will rise to 11 per cent in 2031 from the current figure of 7 per cent.
 “The future forecasts over the next 20 years for the world GDP growth as per IMF is at 3.2 per cent per annum (CAGR) and based on ICAO forecasts, the number of airline passengers is projected to grow at 4 per cent per annum (CAGR) with airline traffic growth outlined to grow at 5 per cent per annum (CAGR),” Malhotra said.Kicking off the debate, two of the giants of aviation will take part in The Big Conversation on the first day of the show, with Emirates Airlines President, Tim Clark, and Qantas CEO, Alan Joyce, discussing their groundbreaking partnership.
 “The last three years have seen the global aviation industry turn a corner despite ongoing market turbulence.
 “While consolidation is the strategy in North America, and European carriers are busy lobbying for an end to excessive taxation and passenger duties, the Middle East and Asia are capitalising on both route network growth opportunities and strong passenger demand,” said Mark Walsh, Portfolio Director, Reed Travel Exhibitions.
 Partnership activity is a major focus of the report as Airlines are proactively seeking for more meaningful alliances and partnerships to boost their synergies and passenger flows.
 According to Malhotra, some Gulf carriers are joining global alliances, whilst others have entered into strategic code shares to promote traffic flows between continents.
http://www.thehindubusinessline.com/industry-and-economy/logistics/global-airline-sector-profit-likely-to-reach-75-bn-in-2013/article4666323.ece
 

Airlines to soon charge for check-in bag, preferred seat

Domestic air fare will now depend on the service you want. While checking-in a bag or getting that preferred seat will cost more, you need to pay just the base price for no-frills travel be it on a full service or a low-cost airline. The Ministry of Civil Aviation today allowed five domestic airlines — Air India, Jet Airways, IndiGo, SpiceJet and Go Air — to charge for facilities they provide flyers. That is, passengers will need to pay for check-in baggage, in-flight meal/snacks/soft drinks, carrying sports gear/musical instruments, or using the airline lounge. The only exception is water, which will be made available free of charge, as is the practice now. But the latest move could also see the cost of travel come down for some. For example a passenger booking well in advance and travelling without any frills on a low-cost airline will be able to travel inexpensively. Called “unbundled services”, the charges for these will be in addition to the base cost of the ticket. However, it is not yet clear whether passengers on full-service airlines such as Air India and Jet Airways will have to pay more for a meal as this is included in the price of the ticket now.  Currently, no airline charges for checking in a bag. Also, Jet Airways and Air India do not charge for blocking a seatHowever, a passenger in IndiGo Plus can block a seat along with meal by paying Rs 650.
The riders
The Civil Aviation Ministry has said that passengers should be given the opportunity to choose the services they want and pay only for them. And, the charges will be fixed irrespective of the base price of the air ticket, and the airlines need to announce them well in advance. The airlines will have to show the cost of unbundled services on their Web sites and online travel portals. The latest move, in a way, seeks to legalise what is being done surreptitiously by some of the airlines even while opening a new source for revenue for airlines like Air India and Jet. This practice has been in vogue in the US and elsewhere for some years, with airlines, low-cost or full-service, charging for checking in a bag.
“We looked at practices of various airlines, including Ryan Air, before coming up with the latest rules. The new rules will help airlines face up to competition from AirAsia,” Civil Aviation Minister Ajit Singh told newspersons. Air Asia and many global low-cost airlines derive a chunk of their revenue from charging for such services. The new rules will come into effect after the Directorate-General of Civil Aviation issues a Civil Aviation Requirement. “The DGCA should be able to notify the new rules in about a week. The DGCA will not regulate what airlines charge for these services,” a senior DGCA official said.
 Terming the move as a “reforms measure”, Amber Dubey, Partner and Head Aviation at KPMG, said the latest move will open a new revenue stream for the airline industry and allow flyers who do not want to use these services to fly at a comparatively cheaper fare.
http://www.thehindubusinessline.com/industry-and-economy/logistics/airlines-to-soon-charge-for-checkin-bag-preferred-seat/article4667327.ece
 

Flying to get costlier as airlines set to charge for preferred seats, check-in bags

NEW DELHI: In a move that would raise the cost of air travel, the government on Monday said it has allowed airlines to charge passengers for preferred seats on a flight, check-in baggages and meals, among other things. "Civil aviation minister Ajit Singh has decided to permit scheduled airlines to unbundle certain services and to charge fees for these services separately," an official release said. The services for which the airlines would be free to charge passengers include preferential seating, meals, snacks, drinks (barring drinking water), check-in baggages, use of airline lounges, carriage of sports equipment and musical instruments and valuable baggages which have higher carrier liability. The practice was launched in 2008 by some US carriers which were facing financial crunch. Their decision to charge for even the first checked baggage had then received flak from air travellers, but the practice still continues with the airlines generating revenue worth millions of dollars. The release said the minister's decision was based on recommendations of an independent consultant, which said, "Unbundling of services ... has become a necessary aspect of exercising more control over operational costs and running a successful airline".  "The objective of the decision is to facilitate airlines to offer low base fare for price sensitive travellers, while at the same time offer choice to service seekers at a price," it said. The decision would "allow the passengers to benefit from lower base fares and to customise the product to better suit their requirements and budget while allowing airlines to develop more sustainable operations in an environment of wafer-thin margins," the release said.
http://timesofindia.indiatimes.com/business/india-business/Flying-to-get-costlier-as-airlines-set-to-charge-for-preferred-seats-check-in-bags/articleshow/19784119.cms

ANA to Resume 787 Scheduled Service on June 1, CEO Ito Says

ANA Holdings Inc. (9202), the biggest operator of Boeing Co. (BA) 787s, aims to resume scheduled flights of the jet on June 1, Chief Executive Officer Shinichiro Ito said yesterday in Tokyo.
Ito, who flew on the airline’s initial test flight yesterday with Boeing Commercial Airplanes President Ray Conner after completion of a fix to the battery system, said Tokyo- based ANA won’t change plans for introducing the Dreamliner to its fleet. The airline expects to receive 10 more planes in the year to March and will assign the next delivery to expanding domestic routes, he told reporters after the flight.
ANA faces a challenge in luring back customers to an aircraft grounded for more than three months after lithium-ion batteries on two planes overheated and melted. A 787 test flight two days ago by Ethiopian Airlines Enterprise was the first since the Jan. 16 grounding, the longest for a large commercial plane by U.S. and Japanese regulators since jet airliners began flying in the 1950s.
“It’s going to be difficult to get passengers to fly,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “A month isn’t long enough to convince passengers. ANA needs to invest a lot of time in flying the planes before customers come back.”
U.S. air safety authorities haven’t determined what caused the battery faults that sparked a Jan. 7 fire on a JAL 787 in Boston and forced an emergency landing by an ANA jet in Japan nine days later.
Japan’s government last week approved resumption of 787 flights by ANA, which operates 17 Dreamliners, and Japan Airlines Co. (9201), the world’s second-largest operator, with seven. Boeing (BA) has about 300 personnel on 10 teams to make the FAA- approved fixes to the battery system, which take about five days each, it has said.
Safe to Fly
The 787 is safe to fly, even as the cause of the battery meltdowns remains uncertain, Mike Sinnett, vice president and chief project engineer of the 787 program, said April 27. Stress testing of Chicago-based Boeing’s redesigned system showed its steel casing and heat vent reduced battery overheating, he said in Tokyo.
“Even if we never know the root cause, the enclosure keeps airplanes safe, and eliminates the possibility of fire,” Sinnet said in Tokyo. “I can’t comment on the root cause because the investigation is ongoing.”
Ito said yesterday ANA has yet to calculate how much the grounding of its 787s cost the airline, and will begin considering the question of compensation after the situation is resolved.
‘Long’ Time
Boeing’s Conner, who said the grounding was a “long” time, said the company will discuss compensation with individual airlines. It’s too early to decide whether the manufacturer will use lithium-ion batteries in the future, he said after yesterday’s flight.
ANA started repairs April 22 at four airports around Japan, according to Ryosei Nomura, a spokesman. JAL also started fixing the batteries last week, Hisanori Iizuka, a spokesman for the carrier, said April 26.
The cost for replacing the battery will be about $465,000 a plane in the U.S., according to the FAA, and the fix adds about 150 pounds of weight to a 787.
ANA will conduct about 230 test flights for pilots with the upgraded 787s, Hiroyuki Ito, a senior executive vice president, told reporters last week. The carrier will also inspect the battery systems after flights.
Monitoring System
ANA and JAL also have put in place a system to monitor the batteries during flights and transmit data to the ground, the carriers have said.
ANA fell 0.5 percent to 209 yen at the close in Tokyo on April 26, while Japan Airlines gained 3.6 percent to 4,750 yen. Boeing rose 1.3 percent to $92.85 in New York trading.
The Dreamliner is the only large commercial jet equipped with lithium-ion batteries as part of its power system. GS Yuasa Corp. (6674) makes the batteries, which are part of an electrical power conversion system built by France’s Thales SA (HO). United Technologies Corp. (UTX)’s aerospace unit supplies the system, which uses enough electricity to power 400 homes.
http://www.businessweek.com/news/2013-04-27/ana-s-dreamliner-test-flight-seen-as-step-in-regaining-customers

 

Boeing team arriving next week to fix Dreamliner battery fault

team of engineers from US aerospace giant Boeing is arriving here on Tuesday to reset the batteries of six Dreamliner aircraft of Air India which are grounded since January after battery fire incidents, sources in the national carrier said.
The Government-run airline plans to put back at least two of the six grounded planes into operations by May 10.
“A team of around 30 engineers is coming to India to reset the batteries of the grounded planes (Boeing-787s) to enable them to fly again,” the sources told PTI here on Sunday.The team, after its arrival, is expected to work on these planes round-the-clock as the airline plans to make all six Dreamliner aircraft operational by the May-end, they said.
“As of now we plan to put into service the first aircraft on May 5 and the second by May 9 once the batteries are reset,” the sources said.
The Federal Aviation Administration (FAA), the US aviation regulator, has approved Boeing’s revamped battery system for these new generation long-haul aircraft.
Following the battery fire incidents in January this year, the entire global fleet of 50 Boeing-787s, owned by eight airlines, including Air India, was grounded.
According to US media reports, the FAA estimates the cost to airlines of modifying each jet with two of Boeing’s beefed-up lithium ion batteries, containment boxes and venting tubes at USD 464,678.
For Air India’s six 787s, total modification cost will come at USD 2.8 million and just over USD 23 million for all 50 jets in service worldwide, the reports said.
The Indian Government has made it clear that it would seek compensation from Boeing for the disruption caused by the grounding of 787s as Air India has been losing an estimated Rs 20 crore each week.
 As per US media, Boeing CEO Jim McNerney reportedly said last week there were no contractual obligations to compensate airlines for the lost revenue. “But having said that, there are a few places where we’ll work with our customers,” Mr. McNerney added.  http://www.thehindu.com/business/Industry/boeing-team-arriving-next-week-to-fix-dreamliner-battery-fault/article4663282.ece
 

and for passengers, with lower fares

The Jet Airways-Etihad deal is expected to intensify competition in the aviation sector. But will it impact air fares dramatically? Aviation analysts and online travel agents (OTA) see interesting times ahead for air passengers.
 According to Sanjay Bhasin, Managing Director of online travel aggregator Goibibo.com, the Jet-Etihad deal will bring in more competition in international sectors and this will cool fares. Jet Airways will have an advantage of getting cheaper fuel from Abu Dhabi which, in turn, will have an impact on fares on certain international routes, he said.
 According to analysts, the Jet deal will add to the supply seats on to international routes and, thus, bring down fares by 10-15 per cent.
 With the revision of air capacity between India and Abu Dhabi, Jet plans to give 23 cities direct access to an expanded global network of 368 destinations. “There will be rationalisation of fares on the US, Africa and South America sectors,” Bhasin added. The Gulf and South-East Asia together account for over 65 per cent of international bookings for the Online Travel Aggregators like Goibibo. “If fares to places like South Africa drop by 10-15 per cent, the demand will shift from Hong Kong and Indonesia to Africa as there may be no fare advantage,” Bhasin said.
 The Jet-Etihad partnership will not only bring in attractive pricing and but also give tough competition to Dubai’s national carrier Emirates, say aviation experts.
 “The deal will give a boost to air connectivity from tier II and tier III cities through code-shares,” says Sharan Lillaney, aviation analyst, Angel Stock Broking.
 Domestic sector fares
 However, in the domestic sector, air fares are expected to remain at the same levels for the rest of the year. The entry of Tata-Air Asia joint venture (JV) is expected in the second half of 2013-14. “At the onset, the JV is expected to focus on tier I and tier II cities with three-four aircraft and will account for only four per cent of the overall industry capacity. We believe AirAsia will ramp up its capacity gradually from 2014-15 onwards. As a result, its entry will not have a significant bearing on key operating parameters, such as average ticket prices in 2013-14,” says Ajay D’Souza, Director, CRISIL Research.
 CRISIL expects the domestic passenger traffic to grow by 2-4 per cent year-on-year to reach around 60 million in 2013-14.
 “We expect the international passenger traffic to continue its steady growth trajectory of 5 per cent in 2013-14 to reach over 41 million. In the long term, growth will be driven by Jet Airways and IndiGo, which are likely to expand their fleet on international routes aggressively over the next two-four years,” D’Souza added.
http://www.thehindubusinessline.com/todays-paper/tp-logistics/and-for-passengers-with-lower-fares/article4664156.ece

A win-win situation for Jet…

Rarely have bilateral air services agreements between India and another country led to the kind of controversy that has been generated post last week’s India-UAE pact.
Last Wednesday, New Delhi signed a bilateral air services agreement (ASA) with the United Arab Emirates, taking the number of seats that airlines from the two countries can fly to destinations in each other’s countries to 36,000 a week over three years. At the moment, the bilateral is pegged at 13,000 seats a week.
 Routinely, India exchanges ASAs with various countries. Generally, an ASA is negotiated when the existing agreement for the number of flights that airlines from the two countries can operate to destinations in each other’s countries has been fully utilised and there is pent-up passenger demand.
 The last time New Delhi signed a bilateral leading to a significant increase in the number of seats was in 2008 when it signed an ASA with Dubai. The bilateral allowed airlines from Dubai and India to operate 54,200 seats a week, an increase of 23,000 seats .
 Monetary factors
 There are two reasons why the latest ASA with Abu Dhabi (UAE) is different.
First, it has to do with the Gulf region being important for India for a variety of reasons, including the fact that around 6.5 million Indians, who are a significant source of foreign remittances, live there.
According to the Ministry of External Affairs, the largest number of Indians in the region is in Saudi Arabia at about 2.45 million, followed by the UAE at about 1.8 million.
 A. R. Ghanashyam, Joint Secretary, Ministry of External Affairs, says that in 2012 the World Bank estimated that $70 billion came into the country as remittances by Indians living abroad. A significant portion of this came from the Gulf region. “Of this $70 billion, maybe $50-60 billion actually came from these people,” he says.
 The Government also wants to project its pro-liberalisation face and favours getting Foreign Direct Investment in the civil aviation sector. The second reason why the latest ASA is different is its timing — it coincided with the Jet Airways-Etihad deal. Last Wednesday, Etihad Airways made a “strategic investment” of $600 million in Jet Airways.
 Etihad is the official carrier of Abu Dhabi and it is looking at this acquisition to further growth. Jet is the fifth airline in which Etihad is acquiring a stake since the UAE carrier started operations in 2008.
It already has a 40 per cent stake in Air Seychelles, apart from 29.21 per cent in Airberlin.
The Abu Dhabi carrier also has a nine per cent stake in Virgin Australia and close to three per cent in Aer Lingus.
 intentions
 Many are looking at the bilateral with Abu Dhabi as a win-win for Jet Airways. Jet has already made clear its intention to operate from 23 cities to Abu Dhabi and then onwards to different parts of the world. Jet has asked for over 40,000 additional seats to Abu Dhabi. The Government is yet to decide on the number that will be given to Jet Airways and other Indian carriers.
The additional seats will also help firm up the new partnership between Etihad and Jet, as the two airlines will get an opportunity to fly from India on one or the other carrier and then continue onward journeys again with either.
 Little wonder that the latest move by the Government has got the industry agitated. Officials from different airlines point out that though the earlier bilateral between India and Abu Dhabi was not fully utilised yet, the two sides have decided to increase the number of seats airlines can operate.
Ministry officials say that Indian carriers were using about 65 per cent, while the UAE side was utilising about 85 per cent of the 13,000 seats available under the earlier bilateral.
They also drop veiled hints that the decision to enhance the bilateral with Abu Dhabi was taken at a much higher, political level. Jet, however, is disputing the contention that the earlier bilateral was not being fully utilised.
 Airport and airline officials also point to the fact that New Delhi’s policy is helping create airport hubs outside the country (Jet is calling Abu Dhabi its gateway, which will be used to carry flyers from India to Abu Dhabi and beyond). They are questioning the wisdom of this move, given that the airports in Delhi and Mumbai were privatised keeping in mind the fact that they would eventually be used as hubs by Indian carriers.
 However, for the moment, the deal is done and sealed. Now, one will have to wait and watch how other carriers, both domestic and international, react. After all, India is one of the few global markets that is seeing an increase in the number of people travelling abroad. And each of these passengers is a potential revenue stream for airlines.
http://www.thehindubusinessline.com/todays-paper/tp-logistics/a-winwin-situation-for-jet/article4664158.ece

Airlines challenge hike in charges at Mumbai airport

NEW DELHI: Federation of Indian Airlines and German carrier Lufthansa have challenged an order of airport economic regulator AERA approving hike in various aeronautical charges at Mumbai airport.
 The Airport Economic Regulatory Authority Appellate Tribunal will hear the petitions of Federation of Indian Airlines (FIA) and Lufthansa on July 18.
The Airports Economic Regulatory Authority (AERA) in a January 15, 2013, order had approved hike in various aeronautical charges such as landing, housing and parking, aerobridge and fuel throughput.
A three-member bench of the tribunal issued notice over condonation of delay to AERA, Airport Authority of India and Ministry of Civil Aviation and Mumbai International Airport Ltd, which operates Chhatrapati Shivaji International airport.
"Issue notice on the application for condonation of delay. Notices are accepted by the counsels appearing for the respective respondents (AERA & others). List the matter on 18th July, 2013," said the tribunal headed by its Chairman Justice V S Sirpurkar in its order.
The Airport Economic Regulatory Authority, Appellate Authority Rules 2010, grants 30 days time to challenge AERA's order. FIA and Lufthansa have come after that stipulated period, hence the tribunal would first decide over the condonation.
AERA, in its order, had also approved a 154 per cent rise in development fee from passengers.
The new tariff had become effective from February this year.
The charges would be in effect for a year. The Chhatrapati Shivaji International airport operator had sought 875 per cent rise in tariff but the regulator has approved a lower tariff hike.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/airlines-challenge-hike-in-charges-at-mumbai-airport/articleshow/19766161.cms
 

Confidence Issues Linger as the Dreamliner Soars Again

BEIJING — For nearly two hours on Sunday morning a Boeing Dreamliner 787 cruised the skies above Japan, with Boeing chief of commercial aircraft, Ray Conner, and the All Nippon Airways president, Shinichiro Ito, on board.

The presence of the two top airline executives on the test flight appeared aimed at restoring confidence in a plane that was grounded in January after two incidents in which batteries overheated in two separate aircraft, leading to a lengthy and costly grounding of the fleet. Fixes designed by Boeing and approved by the Federal Aviation Administration have been made to the batteries and Japanese airline authorities ordered other safety measures, as my colleague Hiroko Tabuchi reported.
 The ANA flight left Haneda airport in Tokyo at 8:59 a.m. local time and returned without incident at 10:54 a.m., Reuters reported, citing an airline spokesman.
Yuya Shino/Reuters Boeing’s chief of commercial aircraft, Ray Conner, (top,) and All Nippon Airways president Shinichiro Ito, (below,) disembark from an ANA Boeing 787 Dreamliner after a test flight at Tokyo’s Haneda airport Sunday.
 What next for the hitherto-troubled Dreamliner? It’s the only large commercial airliner equipped with the lithium-ion battery as part of its power system (the battery is made by a Japanese company,) Bloomberg News reported.
It’s all about the fixes working, of course – but also about confidence, analysts said.
 The fixes include better insulation between the eight cells in the battery, gentler charging to minimize stress and a new titanium venting system, The New York Times reported.
Enough? Akihiro Ota, the Japanese transportation minister, seemed to think so, saying at a news conference last week he was satisfied with the measures Boeing had taken to eliminate risks of fire. “They have adopted defense in depth,” Mr. Ota said.
 But ANA plans at least 230 test flights in May before putting the aircraft back into commercial use, Reuters reported. It owns 17 of the 50 Dreamliners already delivered, while Japan Airlines owns seven. Ethiopian Airlines Saturday made the first commercial flight with a Dreamliner since January. JAL will begin test flying its Dreamliners in May and aims to resume normal operations in June, the airline said.
 ANA said it intended to set up a dedicated Web site to address passenger concerns about the safety of the 787.
“It’s going to be difficult to get passengers to fly,” Ryota Himeno, an analyst at Barclays Securities in Japan, told Bloomberg. “ANA needs to invest a lot of time in flying the planes before customers come back.”
 Japanese transportation authorities are aware of the challenge. “We will ask Japanese airlines to ensure the safety of passengers and provide them with information,” Mr. Ota, the transport minister, said last week.
 Boeing rival Airbus has decided to abandon the battery in question, Bloomberg reported. It will not use lithium-ion batteries for its A350, the direct rival to the 787, after Boeing encountered problems. Airbus plans the first A350 deliveries next year, Bloomberg said.
 Despite the problems, Boeing profits rose in the first quarter, according to reports.
 “Our first priority in the days ahead is to fully restore our customers’ 787 fleets to service and resume production deliveries,” Boeing chairman Jim McNerney said in a statement last week. McNerney said that the company “worked around the clock to resolve the 787 battery issue,” while increasing deliveries of the 737 and 777 planes.
http://rendezvous.blogs.nytimes.com/2013/04/28/confidence-issues-linger-as-the-dreamliner-soars-again/

Japan to allow airlines to resume 787 flights

The Japan government is poised to allow Japanese airlines to resume flying grounded Boeing 787s once they complete installation of systems to reduce fire risk in problematic lithium ion batteries, Akihiro Ohta, Transport Minister said today.

 The approval could come as early as this evening following an expected formal safety order from the US federal regulators, he said in a statement on the ministry’s website.

 The 50 Dreamliner jets in service worldwide were grounded in mid-January after incidents with smouldering batteries occurred aboard two different planes.

 The groundings have led to hundreds of cancelled flights and big revenue losses.

 The US Federal Aviation Administration posted a safety order online yesterday allowing 787 flights to resume once the batteries are replaced with a revamped system that manufacturer Boeing Co. says sharply reduces the risk of fire.

 Japan’s two biggest airlines began installing revamped lithium ion batteries over the past week. All Nippon Airways owns 17 of the jets and Japan Airlines has seven.

 They declined to comment on when their 787 flights might resume

http://www.thehindubusinessline.com/news/international/japan-to-allow-airlines-to-resume-787-flights/article4657382.ece

Small investors, HNIs hike Kingfisher stake; FIIs trim holding

Small individual investors and high net-worth individuals (HNIs) have continued their share buying spree in Kingfisher Airlines, despite the ailing carrier been grounded for nearly seven months after its licence was suspended.

However, foreign institutional investors (FIIs) reduced their exposure to the beleaguered airlines to 0.85 per cent at the close of last quarter ended March 31, from 1.07 per cent three months ago. The holding of domestic institutions has also came down during this period.

The high-networth individuals raised their stake in cash-strapped carrier to 16.58 per cent at the end of the March quarter from 15.74 per cent in the preceding three months, while holding of small individual investors rose to 20.59 per cent from 19.25 per cent, as per stock exchanges data. Small investors (defined as those holding up to Rs 1 lakh worth shares in a company), and HNIs (individuals with shares worth over Rs 1 lakh) have been raising their respective stakes in Vijay Mallya-led Kingfisher Airlines since April-June quarter of 2012.

Besides, the latest shareholding data of Kingfisher shows that the number of small individual and HNI shareholders have also increased considerably during this time.

The total promoter holding declined to 32.12 per cent in the January-March quarter from 35.83 per cent in December quarter.

The promoters have pledged 89 per cent of their shares with various lenders, leaving them with a non-encumbered stake of just 3.55 per cent.

The shareholding of institutional investors (insurance, banks and financial institutions) has also come down in the March quarter to 13.76 per cent from 14.13 per cent in the December quarter, data showed.

The stake of domestic institutional investors slipped marginally to 13.06 per cent in December quarter from 13.15 per cent in the preceding three months.

The operations of Kingfisher remains disrupted since September 30, first due to a strike by its engineers and pilots, and then the lockout declared by the management.

This was followed by suspension of its flying permit by Directorate General of Civil Aviation after the carrier failed to produce a plan to revive its operations.

Shares of Kingfisher have declined by 54 per cent during the quarter under review. The company’s scrip is currently trading at Rs 7 level.

The total number of small shareholders currently stand at 2.30 lakh against 2.22 lakh at the end of December 31, 2012 and the number of HNIs were 3,653 compared to 3,390 during the same period.

http://www.thehindubusinessline.com/markets/small-investors-hnis-hike-kingfisher-stake-fiis-trim-holding/article4657194.ece

AAI preparing detailed project report for Itanagar airport

The Airports Authority of India (AAI) is preparing a Detailed Project Report (DPR) for the proposed airport here, official sources said on Friday. Besides, the AAI is in the process of obtaining environmental and other clearances for the proposed airport.

The draft Master Plan for the airport site at Holongi projects a requirement of 320 hectares of land, which has been forwarded to the state government, the sources said.

This was informed to the local MP Takam Sanjoy by Civil Aviation Minister Ajit Singh in a letter yesterday, the sources said.

http://www.thehindubusinessline.com/industry-and-economy/logistics/aai-preparing-detailed-project-report-for-itanagar-airport/article4657247.ece

Competition watchdog may examine Jet-Etihad deal on its own

The Competition Commission of India is unlikely to wait for a formal reference in order to examine the Jet Airways-Etihad Airways deal to ensure that the deal does not create a monopoly in the aviation sector, sources close to the development said.

 “The Commission has the prerogative to act on its own in a cross-border acquisition of this nature. However, it is believed that Jet Airways may approach the Commission shortly to seek its go ahead in the deal,” the sources added.

 Earlier this week, Etihad Airways, the national carrier of Abu Dhabi, bought a 24 per cent stake in Jet Airways for Rs 2,054 crore ($379 million).

 Just before the deal was announced, India and Abu Dhabi exchanged a new bilateral air services agreement that sharply increases the number of weekly flights that carriers from both countries will be allowed to operate between the two countries.

 The agreement will see Jet Airways, Air India, IndiGo and SpiceJet from the Indian side and Etihad from the Abu Dhabi side offering a total of 36,670 seats a week in each direction, over the next three years.

At the moment, the airlines are allowed to operate about 13,300 seats a week.

The equity sale deal between Jet and Etihad would increase the combine’s global strength to cover as many 140 destinations providing direct foreign connectivity to Indian passengers from 23 metro and non-metro cities. Also, under the agreement, Jet and Etihad will explore joint purchasing opportunities for fuel, spare parts and equipment, among others.

Indian carriers including the state-owned Air India, as well as private sector airports in the country have raised concerns about the deal. Airlines from India claim that India and Abu Dhabi did not need to exchange more air seats between each other as the existing air services agreement has not yet been fully utilised.

At the moment, airlines from Abu Dhabi and India use about 80 per cent of the seats that they have been allowed to operate. Jet Airways, however, says that it is incorrect to say that the India-Abu Dhabi bilateral, that allows airlines from both sides to operate regular flights, is not fully utilised.

Airlines also allege that the tie-up between Jet and Etihad will see Indian passengers being diverted via Abu Dhabi on their journey onwards to the US, Europe and Canada.

 According to the Competition Act, all high-value merger and acquisitions with combined turnover of Rs 4,500 crore or more need the approval of the competition watchdog. Jet and Etihad expect the deal to go through in the next two to three months.

http://www.thehindubusinessline.com/industry-and-economy/logistics/competition-watchdog-may-examine-jetetihad-deal-on-its-own/article4657922.ect

Co-pilots

Etihad Airways is betting big on India. The ambitious UAE carrier is throwing indebted Jet Airways, the largest publicly traded airline on the subcontinent, a $600-million lifeline. The deal buys Etihad a 24 per cent stake, control of Jet's loyalty programme, and landing slots at Heathrow. That makes it the first company to take advantage of newly relaxed foreign ownership rules in India, as it seeks to tap one of the fastest growing aviation markets in the world.
 Jet is one of India's top airlines but the price paid still looks a bit generous. Etihad is paying $380 million or a 32 per cent premium for its minority interest. That's on top of a 63 per cent rise in the share price since mid-September when reports of a deal between the pair first surfaced. That type of premium is usually justified by a change of control. In this case, Jet founder Naresh Goyal will remain non-executive chairman, and retain a 51 per cent stake.
 Goyal has obviously driven a hard bargain even though his company badly needed the funds. The airline has to repay $400 million each year. At the end of December, Jet had $134 million of cash on total debt of $2.2 billion and had already been forced to enter sale and lease back agreements ahead of the tie-up. With Etihad, it will have a deep-pocketed partner.The premium reflects the importance of India to Etihad. Over the last two years, the airline has snapped up minority stakes in Air Berlin, Virgin Australia, Aer Lingus and Air Seychelles but this is its biggest and most important bet. Only three hours away by air, India's population is over 150 times bigger than that of the UAE and can provide traffic for Eithad's routes to the US, Europe, Africa and the West Asia.
 The success of Etihad's bet will depend on the capacity of the two strong characters at the head of each airline to stay on friendly terms, in order to navigate difficult political waters. Goyal long opposed the entrance of foreign airlines into India. And Etihad Chief Executive James Hogan might want a bigger say in how the Indian carrier is run after handing over cash worth two thirds of Jet's market value. Working together, the pair could be a powerful partnership. If they ever fall out, it would be a disaster.
http://www.business-standard.com/article/opinion/co-pilots-113042500910_1.html
 

Is it time to sell the Jet Airways share?

Buy the rumour, sell the news” is an adage as old as the markets. By this logic, Jet Airways becomes a sell. The best possible news that could have been expected has hit the markets, when Etihad announced it would buy a 24 per cent stake in Jet Airways through a preferential allotment.
 The immediate benefit that could have been expected from the deal was that minority shareholders would get a chance to submit their shares in the open offer. But this is not going to happen as Etihad will be picking up only 24 per cent stake in the company, a tad short of the 25 per cent required to trigger the takeover code. Also, there will be no ‘change in control’ in the management of Jet Airways, another criterion for triggering the code. Thus, there is no immediate benefit for shareholders from the deal, apart from the change in perception.
 In the medium term, the Jet balance sheet will become a little healthier, with an improvement in its debt-equity ratio. Major gains from the deal for Jet will be in its international operations, rather than in India. There are synergies in schedule coordination, sharing of infrastructure, maintenance, sales offices and joint purchases. Hopes of Etihad reducing its number of flights to accommodate Jet Airways are unlikely to be met; Jet will have to make way for the bigger parent.
 There is little doubt that the deal is skewed in favour of Etihad, which it should be, as it is pumping in money. Etihad, which was having trouble increasing its current market share in India (low at two per cent), compared to 13 per cent of Emirates, will now have greater access to Indian cities through a deeper code sharing arrangement with Jet.
 From Etihad’s point of view this deal is akin to buying out a competitor and gaining market share. Etihad needs to fill its plane first and then think of helping Jet Airways survive. Being the national airline of the United Arab Emirates, the company has managed to strike a deal with the Indian government on seat expansion, with hopes of making Abu Dhabi a transit hub. Etihad would appreciate the burgeoning numbers of Indian passengers and Jet is the means to reach them.
 For Jet, the deal would result in an inflow of Rs 2,060 crore, which would disappear in a flash, given its huge pile of debt of Rs 12,600 crore. For the year ending March 2012, the company’s interest outgo (consolidated) was twice its operating profit. All that had remained in its net worth was Rs 130.9 crore. Without this deal, there was a threat of complete erosion of its equity.
 While Jet gets some breathing space with the fund inflow, allowing it some more room to leverage itself, the deal will do little to help the company face the challenging climate in India. With AirAsia expected to start operations, things might only get tougher. Etihad is a full-service airline and not a no-frills one like AirAsia. Thus, its expertise will be of little use for Jet Airways to carry out its operations in India.
 With Etihad getting some board representation, Jet Airways might find it difficult to operate as freely as it used to earlier. There is no doubt that valuable insights will come in from Etihad’s member but this will be only when Jet is not seen to be stepping on Etihad’s foot.
 The Jet Airways stock opened at the day’s high of Rs 688.60 and slipped continuously to close the day at Rs 635.20, near the day’s low. There were clearly more sellers in the stock than buyers.
 There is nothing in the short term for the stock, while the medium term picture is hazy. Should you still hold on to the shares?
http://www.business-standard.com/article/markets/is-it-time-to-sell-the-jet-airways-share-113042500162_1.html

Jet Airways, national carrier

In the absence of a national aviation policy, the government has been taking ad hoc decisions from time to time to address the concerns of the aviation sector. Being ad hoc in character, several decisions taken to respond to a particular crisis have often led to the creation of other problems for the industry. This should, however, not come as a surprise to anyone because the ministry of civil aviation, managed by bureaucrats, besides lacking the vision for the industry, does not have the requisite experience and understanding of the sector. If proof were needed to prove this point, one has only to see how the national carrier, Air India, has been systematically harmed through numerous decisions.
 A policy decision relating to foreign direct investment (FDI) by foreign airlines in domestic airlines, taken in September 2012, was welcomed by all, even though it came too late for Kingfisher Airlines, the airline that had originally mooted the demand. With the finances of most domestic airlines in disarray, debt on the balance sheet mounting, losses being incurred quarter after quarter, and banks refusing to extend any more loans, investment by foreign airlines was considered imperative for survival.
 Jet Airways was among the first to begin parleys with interested airlines, notably Abu Dhabi-based Etihad. After months of discussions, hopping through the power corridors in Delhi, meeting one minister after another for what was described as an exercise in seeking assurances for safety of investment, when the deal was finally struck earlier this week between the two airlines, it did not evoke the response one would have expected. Though there was unanimity that the two airlines would stand to benefit enormously, the bitterness came owing to the sweetener added by the ministry of civil aviation by way of granting over 40,000 additional seats per week on the India-Abu Dhabi sector over a three-year period. These seats were given away at a time when India was witnessing negative growth. Where was the need for additional capacity?
 This has led to a question: was the grant of additional seats factored in for Jet Airways to obtain a higher valuation compared to what was being discussed in January 2013? Given that the two announcements - stake sale and grant of additional seats - came within hours of each other, was an assurance on additional seats demanded by the airlines and given by the government before the pronouncement of stake sale? These are serious questions because, if the link can be established, it is not only akin to insider trading but also demonstrates how decisions can be forced out of the government by powerful individuals.Civil Aviation Minister Ajit Singh has scoffed at any such insinuation, stating that no assurance was held out. Can anyone expect policy makers to say anything else in their defence in such a situation? Also, can one ignore the clout that Naresh Goyal has always wielded with the government in the formulation of civil aviation policies?
 What is also interesting is the fact that grant of additional seats was preceded by a meeting chaired by the civil aviation secretary, in which all stakeholders participated. All domestic airlines, including Air India, and airport operators were unanimous in opposing the grant of seats in such huge numbers. Ignoring their pleas, the ministry still went ahead, giving rise to yet another question: was the meeting a ritual to be gone through, and why were views sought when they were not being considered? What were the compulsions that dictated the decision, without reduction of even a single seat from the demanded number? Isn't he answerable to the nation as to what prompted him to disregard the stakeholders' views, if not provide justification for overruling their views?
 The views expressed by the airlines and airport operators were indeed legitimate. If airlines felt that one airline would stand to gain at the expense of others, airport operators thought the creation of a hub for Indian traffic in Abu Dhabi will ensure that India will never have a hub of its own, besides adversely impacting the growth of Indian airports.
 One can always justify a decision, however dubious, by stating that the grant of seats will enhance competition, and will be in passengers' interest. But the question whether it is the government's business to sweeten the deal and help an airline obtain a higher valuation still can't be ducked.
 The government has formulated a turnaround plan for the national carrier and has already infused about Rs 8,000 crore of taxpayer money. Can Air India attain a turnaround in changed circumstances when someone else is being allowed to take away its traffic? What will it do with its large fleet of long-haul aircraft, which was increased from 10 to 50 by the same government? What will it do with its 350-seater B777-300 aircraft, which were bought on the assumption that it would get passengers from neighbouring cities to fly to destinations in Europe and the US, a market it will lose once Jet Airways begins operations from 23 Indian cities to Abu Dhabi for flying onwards?
 What one can also not ignore is the fact that the grant of additional seats on the India-Abu Dhabi sector is bound to give rise to similar demands from other countries. Will the government have a different yardstick for them? Consider a hypothetical situation of a southeast Asian carrier showing interest in SpiceJet. Will the government help create another hub in southeast Asia to facilitate FDI in SpiceJet by granting a huge number of seats? Market paradigms have indeed been changed by the government in one stroke. All other airlines will also be forced to relook at their business models and fleet acquisition plans in the changed circumstances.
 With the survival of Air India made still more difficult, let us welcome Jet Airways as the national carrier because it enjoys the patronage of the Government of India and has been given a head start!
http://www.business-standard.com/article/opinion/jet-airways-national-carrier-113042500916_1.html

AirAsia India files application to start operations

Newly-formed AirAsia India, the Indian arm of Malaysia's low-cost carrier AirAsia, has filed an application with the civil aviation ministry for permission to launch its operations, official sources said in New Delhi on Thursday.
 The airline had filed its application with the ministry on Tuesday.
 The joint venture company is likely to have at least six members on its board, comprising two nominees each from AirAsia and Tata Sons and one representative from Telestra Tradeplace.
 There would be an independent director on the board, who would also be the non-executive chairman.
http://www.business-standard.com/article/companies/airasia-india-files-application-to-start-operations-113042600008_1.html

Etihad Airways to get right of first refusal

The deal between Etihad Airways and Jet Airways has a ‘right of first refusal’ clause, which gives the Abu Dhabi-based airline an opportunity to increase its stake in the Indian carrier if the Jet promoters decide to sell further stake in future.
 The two airlines inked an alliance on Wednesday, under which Etihad will purchase 24 per cent stake in Jet Airways for about Rs 2,054 crore through the preferential allotment route.
 Prior to the allotment of preference shares, Jet Airways’ promoter Naresh Goyal, who holds 80 per cent in the airline through Isle of Man-registered Tail Winds, will sell about 10 per cent of his stake. This will make the airline comply with the 25 per cent minimum public shareholding requirement.
 Subsequent to the stake sale by existing promoters to public shareholders and allotment to Etihad, Goyal’s holding in the company will drop to 51 per cent. Etihad will own 24 per cent and the balance 25 per cent with be with minority shareholders.
 Etihad’s holding in the company will be categorised as promoter-holding and it will be treated as a person acting in concert (PAC), said people close to the development. They added that even if Etihad and Jet are treated as PACs, it would not trigger the obligation of the takeover code.
 However, some legal experts think otherwise. J N Gupta, founder of proxy advisory firm Stakeholder Empowerment Services and former executive director with the Securities and Exchange Board of India (Sebi), said if Jet and Etihad are PACs, it would trigger open offer under Sebi’s Substantial Acquisition of Shares and Takeovers Regulations.
 According to sources, Jet would appoint a new CEO, replacing Nikos Kardassis, who has been associated with the airline since 1994.
 While a Jet spokesperson termed appointment of a new CEO as “speculative information”, she did not respond to other issues.
 Senior counsel Harish Salve, who advised Jet during the deal, too, had avoided a comment on the right to first refusal clause in a television interview on Wednesday.
 Sources, however, said the new CEO has already been selected. There will be other changes in senior management as well, sources added.
 Kardassis is currently on medical leave and Hameed Ali, the chief operating officer, is holding charge of CEO post in the former’s absence.
 Ali, a Bahraini national, signed the deal with Etihad on behalf of Jet Airways on Wednesday.
 While Etihad is advised by HSBC, DLA Piper, Amarchand & Mangaldas & Suresh A. Shroff & Co and PricewaterhouseCoopers on this transaction, Jet Airways is advised by Harish Salve, Gagrats, ELP, Ernst & Young, DSP Merrill Lynch Limited and Credit Suisse.
http://www.business-standard.com/article/companies/etihad-airways-to-get-right-of-first-refusal-113042500639_1.html

Air travel map being redrawn as global economy evolves: Etihad

DUBAI: The global air travel map is being redrawn as growth rates slow in traditional markets and surge in evolving economies including India, Africa and Latin America, President and CEO of Etihad AirwaysJames Hogan has said.
Hogan's comments have come after the recent announcement by Etihad Airways of a 24 per cent strategic equity investment in Jet AirwaysBSE -2.33 %, the second largest airline in India.
 Delivering the fifth annual Airneth Lecture to aviation industry executives, policymakers and researchers in Amsterdam, Hogan said the major shift occurring in the global economy is impacting significantly the air transport industry, requiring airlines to reshape their networks and enter new partnerships in order to remain competitive.
 He said markets which would benefit most from the continued growth in air transport would be those in 'aviation-friendly jurisdictions' in which governments recognised the economic contributions of airlines and the technological advances and capabilities of aircraft.
 "Legacy markets are growing, but at a slower pace. Emerging markets are surging. Traffic patterns and demographics are changing. Traditional air transport hubs are declining in prominence, with growth constrained by inadequate infrastructure and ingrained political resistance to change.
 "The Arabian Gulf - the geographic centre of the world - is now evolving as the global centre of the air transport industry, with the number of passengers passing through Gulf hubs outstripping industry growth rates," said Hogan.
 IATA figures shows that in February, 2013, Middle East hub traffic was up by 10.6 per cent over February, 2012, compared with the global growth rate of 3.7 per cent.

Hogan said the airline industry is entering a new phase of consolidation, as no single carrier could satisfy the global growth in passenger traffic.
In addition to its new investment in Jet Airways, Etihad Airways has acquired stakes in airberlin (just under 30 per cent), Air Seychelles (40 per cent), Virgin Australia (8.56 per cent) and Aer Lingus (just under 3 per cent), and continues to explore opportunities where they make financial and strategic sense.
 Hogan also said a new hybrid business model is emerging, in which minority equity alliances are bridging the gap between full mergers and legacy alliances.
 "The new business model delivers benefits which previously were available only through full mergers or acquisitions," he said.
 These benefits include joint procurement, ross-utilisation of aircraft, joint training of pilots and cabin crew, shared sales forces in common destinations, and dual focus on revenue growth and cost reduction.
 He said growth also would be maximised in markets like Abu Dhabi where governments embraced and implemented open skies policies, and planned airports, infrastructure, airspace corridors and operational regulations to support the industry and its customers
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/air-travel-map-being-redrawn-as-global-economy-evolves-etihad/articleshow/19736771.cms

350 Baggage Theft Cases Reported At Indian Airports Since 2010

NEW DELHI, April 26 (Bernama) -- About 350 cases of baggage theft have been reported at domestic and international airports in the country since 2010, Press Trust of India (PTI) reported.
Minister of State for Civil Aviation K C Venugopal said in a written reply in the Rajya Sabha (upper house of Indian parliament) on Thursday that incidents of baggage theft were reported at 19 airports in the country.
 According to him, 105 cases were reported in 2010 with 35 at Mumbai airport, Delhi (26), Hyderabad (14), Kolkata (seven), Cochin (six), Jaipur (five), Chennai and Calicut (three each), Coimbatore and Bagdogra (two each) and one at Raipur airport.
 In 2011, out of 126 cases reported, Kolkata airport recorded the highest number at 32 followed by Delhi (31), Mumbai (28), Cochin (nine), Hyderabad (eight), Calicut (seven), Jaipur (four), Chennai and Port Blair (two each), and one each at Aizwal, Ahmedabad and Thiruvananthapuram airports.
 However, theft cases went down to 86 in the country last year.
 A total of 24 cases were reported at Delhi airport, 22 from Mumbai, Cochin (11), Hyderabad (nine), Jaipur and Kolkata (six each), Thiruvananthapuram (three), Agartala and Raipur (two each) and Indore (one).
 Thirty-two baggage theft cases have been reported up to March this year, with 11 from Delhi airport, Mumbai (nine), Cochin (five), Hyderabad (two) and one each from Bhuj, Kolkata and Madurai.
http://www.bernama.com.my/bernama/v7/wn/newsworld.php?id=945283
 

Abu Dhabi to invest Rs 27,000 crore in India

NEW DELHI: Abu Dhabi's commitment to invest Rs 27,000 crore in India may have proved to be the clincher for India agreeing to grant a massive increase in flying rights between the two countries. This commitment was made to top Indian ministers, who visited the oil rich emirate in recent weeks.
 Aviation minister Ajit Singh described the $379 investment by Etihad in Jet as a win-win for flyers. "It provides more competition and more connectivity and better efficiency. Competition is always good for any industry," Singh told reporters, while asking Air India to "look after themselves and gear up."
Etihad president and CEO James Hogan on Thursday said it expected strong growth from the Indian market. "From 42 million travellers last year, International Air Transport Association is predicting more than 100 million by 2016 — in just four years. Together, through a combination of codeshare services and direct flights, Etihad and Jet will connect 23 Indian cities to international services," the Hogan said in reply to a TOI questionnaire.
However, India is unlikely to see Etihad's Airbus A-380s to fly here. "Etihad will receive the first of 10 A-380s late in 2014. The routes these aircraft will fly are yet to be finalized, but the intention is to operate them on long-haul, high capacity routes. It is likely through code sharing (between the airlines) that Jet passengers will experience not only our A-380s when they enter service, but also our new Boeing 787 Dreamliners and other aircraft," Hogan said.
The Gulf carrier is looking at a major partnership with Jet as the latter plans to use Abu Dhabi as its biggest hub. "We will explore joint purchasing of supplies such as fuel, spare parts, equipment and catering supplies, as well as external services such as insurance and technology support," he said.
http://timesofindia.indiatimes.com/business/india-business/Abu-Dhabi-to-invest-Rs-27000-crore-in-India/articleshow/19734214.cms

Travel guide: Skyscanner to offer multi-modal fare checks

Travel research site Skyscanner, which entered the Indian market nearly a year ago, plans to offer price comparisons between flights, trains and buses by next year.
 Ewan Gray, Director-Asia Pacific, Skyscanner, said, “We are interested in offering comparisons between various forms of transport such as flights, buses and trains. We are in the research stage and may start offering these to Indian consumers by next year.” He said, at present, the company offers this service in Europe. The fact that there were nearly 15 million bus bookings in India last year, shows the potential the country offers for travel search, he added.
 Skyscanner already offers price comparisons between flights, hotels and car rentals in India.
The Web site earns fees from flights and hotel partners if a consumer does a booking based on its research. India is among its fastest-growing sites in terms of the number of hits it gets. Gray also claimed that the company had the largest number of Facebook followers in India.
He said nearly 60 per cent of its traffic in India came from mobile phones. Skyscanner is now focusing on strengthening its partnerships with Indian travel aggregators, airlines and hotels.
Aviation marketing saw challenges in 2012 in India and there is now less capacity and air fares are high, which means there are fewer deals being offered.
This makes us important for consumers looking for cheaper fares, he said
http://www.thehindubusinessline.com/todays-paper/tp-logistics/travel-guide-skyscanner-to-offer-multimodal-fare-checks/article4654863.ece
Operators not keen to start services before monsoon
THIRUVANANTHAPURAM: Kerala's seaplane project is progressing right on schedule, but seaplane operators say that they would prefer to wait out the monsoon before starting full-fledged operations.

Bharat Aviation director P Joseph Doss said he was ready with a Cessna 208 but would prefer to wait till September. "There is no point flying for two months and parking the aircraft for the next three. It is not economical. Also, as the pilots will be operating under visual flight rules, we don't want to compromise the safety of passengers, especially as we will be landing on water," he said.

Meanwhile, a senior tourism department official said four houseboats are being refitted to accommodate baggage screeners and safety equipment at Alappuzha. "We will be ready with houseboats by April 28. At the outset, seaplanes will operate from four locations - Ashtamudi, Punnamada, Kumarakom and Bekal. The Kochi shipping channel needs to be demarcated and a certain area cordoned off to include Bolgatty as a seaplane destination, which could take a while," he said.

Sandith Thandasherry, CEO of Navgathi Marine Design & Constructions that has been entrusted with designing the houseboats, said the boats would act as a security hold area. "Regular houseboats around 25-30 meters in length were found to be optimal. All boats are around six months to 1 year old, and some of them had life saving devices such as floodable protection keeping with the 2010 Kerala Inland Vessel Rules, but it will be a standard fixture. We've also redesigned the pontoon to improve handling. Partitions will be used to create separate spaces within the boat," he said.

The tourism official informed that prefabricated jetties were ready and would be floated as and when required. "Once the jetty and the houseboat is in place the airport security group will be pressed into service to guard the equipment," he said.
http://timesofindia.indiatimes.com/city/thiruvananthapuram/Operators-not-keen-to-start-services-before-monsoon/articleshow/19733718.cms
 

Airlines have to apply fresh for more flights to Abu Dhabi

New Delhi, April 25:  
Jet Airways, Air India, SpiceJet and IndiGo will have to submit fresh proposals to the Ministry of Civil Aviation seeking permission to operate more flights to Abu Dhabi.
The additional seats have become available with the Governments of India and Abu Dhabi agreeing late on Wednesday night to allow their airlines to operate 36,670 seats a week in the next three years. At present , airlines from both the sides are allowed to operate 13,600 seats a week.
 “Earlier the Ministry had sought to assess the initial demand from airlines and it was on this basis that the bilateral was concluded. Now, we will assess whether the airlines have enough aircraft, and their plans include flying from cities from which there is demand before making a final decision on allocation,” a senior official in the Ministry of Civil Aviation said.
 Before the Indian delegation left for Abu Dhabi, Jet Airways had sought its approval to operate 42,000 seats a week while Air India Express sought an additional 3,000 seats.
IndiGo and SpiceJet had sought permission to operate an additional 5,000 seats a week.
 In case the demand on a particular route outstrips the weekly seats allocated by the Ministry, then a decision will be taken after looking at the numbers of passengers and the distance that the various claimant airlines have flown in the domestic skies in the last three years.
India has also put a restriction on the number of daily flights and weekly seats that Abu Dhabi national carrier Etihad can operate to both Mumbai and Delhi from Abu Dhabi.
“Etihad can now operate 3,300 seats a week up from about 1,800 seats a week earlier, but it cannot operate more than two flights a day to these two metros. At smaller Indian airports there is a restriction on the number of seats that Etihad can operate a week but there is no restriction on how many flights a day they can operate,” an official said.
http://www.thehindubusinessline.com/todays-paper/tp-economy/airlines-have-to-apply-fresh-for-more-flights-to-abu-dhabi/article4654838.ece
 

Jet may have to offload 9.8% stake to public

After the mega deal with Etihad, the promoter group of Jet Airways is likely to offload 9.8 per cent of their stake to meet the SEBI’s minimum public shareholding norms of 25 per cent.
 According to Thursday’s closing price of Rs 635.20, this 9.8 per cent stake in Jet Airways will be valued at Rs 707.2 crore.
 The deadline to meet the minimum public shareholding norms is June this year.
Currently, promoter shareholding in Jet Airwa stands at 80 per cent. The preferential allotment to Etihad would result in an increase in the equity base of the company.
Subsequently, the shareholding of existing promoters would fall to 60.8 per cent.
This combined with its strategic partner Etihad’s stake of 24 per cent would take the promoter group holding to 84.8 per cent.
According to SEBI’s minimum public shareholding norms, the promoter group holding is capped at 75 per cent. This necessitates the offloading of 9.8 per cent stake by Jet Airways’ promoter group through either offer-for-sale (OFS) or through Institutional Placement Programme.
 The Jet Airways stock soared 10.69 per cent to close at Rs 635.20 on Thursday. It touched a 52-week high of Rs 688.60 in intra-day trade with a total traded quantity of 22.60 lakh against a two week average of 4.81 lakh. The Abu Dhabi-based carrier Etihad Airways picked up 24 per cent stake in the airline at Rs 754.74/share for Rs 2,050 crore. The acquisition price is at a 31.7 per cent premium to Jet Air’s closing share price on Tuesday. This is part of a $600-million commitment to strengthen the partnership between the two airlines. The current deal values Jet at around Rs 8,500 crore.
“The deal will have a positive impact on the stock. It might see a temporary correction after the closure of the OFS owing to the likely discount offered to shareholders under it. But eventually, the stock should bounce back owing to the twin benefit of the liquidity condition improving in Jet Airways owing to the cash inflow from the deal and well as owing to the cost-saving benefit owing to the long-term arrangement for seat sharing and international passenger traffic on certain routes,” said an equities analyst from Motilal Oswal Financial Services.
http://www.thehindubusinessline.com/todays-paper/tp-markets/jet-may-have-to-offload-98-stake-to-public/article4654891.ece
 

Deal to be a game-changer for Jet AirwaysThe strategic investment by the

Abu Dhabi-based Etihad Airways in Jet Airways could be a game-changer for the latter and its shareholders. According to the deal, Jet will be issuing 27.2 million shares to Etihad for Rs 754.7 apiece totalling Rs 2,060 crore. In the short term, the deal brings much-needed cash and will help Jet improve its debt-laden balance sheet and improve its financial ratios. In the long term, too, the strategic alliance with Etihad will make Jet more competitive in the domestic market as well as on international routes, which now account for 60 per cent of its revenues and operating profits. Jet’s stock, which scaled to its two-year high of Rs 625 levels in December 2012, is thus expected to rule firm on Thursday.
The deal could be a game-changer for Jet. Says Sharan Lillaney of Angel Broking, “The deal is a positive as Jet will be able to refinance its high-cost debt and improve its cash flows. In addition to improving its balance sheet, the company can also look at expansions, both in the domestic as well as international markets.” On the valuations front, the deal implies a market capitalisation to sales of 0.3-0.4 times (and 31 per cent premium to current market price), a decent premium, believe analysts. This could set a benchmark for similar deals in future, says Lillaney.
On the operational front, the deal will convert two competitors into partners and help reduce costs and at the same time expand their network, says Lillaney. Among the smaller areas of co-operation could be parking and landing slots, ground handling and aircraft maintenance. While asset utilisation could be optimised, the two would also be in a position to offer wider options to their customers. More importantly, an improvement in cash flows also means Jet will be able to bargain for higher discounts on airport charges and fuel. Oil marketing companies (OMCs) give a cash discount to the tune of 5-10 per cent on aviation turbine fuel (ATF). More, any loans or guarantees from Etihad will also help Jet Airways bring down its costs.
On the business front, the macro environment is also turning positive, with a fall in crude oil prices. Given the 17 per cent fall in crude oil prices since mid-February, expect Jet to benefit given that fuel accounts for 45 per cent of its operating costs.
“Expect airlines to pass on the benefits of fuel price cuts to consumers, which will stimulate flagging demand and help shore up their passenger loads,” says an analyst with a domestic brokerage. Passenger demand has been on the decline for six months, forcing all airline companies to launch discount schemes earlier this year, despite the drop in capacity and lower competition on account of grounding of Kingfisher Airlines. However, post the recent five per cent cut by OMCs last week, analysts expect more cuts next month. In the medium term, analysts expect demand to perk and with prices likely to remain firm, they expect loads and yields to improve.

Jet Airways, which came out with its IPO in 2005 at Rs 1,100 a share, has been quoting below the offer price since early 2006. Despite a 70 per cent rally in the past six months, in anticipation of the deal, the stock is still trading at half of its IPO price (while the Sensex has tripled in value). A lot of this can be attributed to Jet reporting losses (on a net basis) since FY07, due to the combined effect of poor yields on domestic routes, high fuel prices and interest and depreciation charges on acquiring new aircraft. Between FY06 and FY09, Jet quadrupled its fleet size at a cost of nearly Rs 14,000 crore, largely financed through debt. This started hurting when air fares in India tumbled and ATF prices soared leading to losses. During the last few years, Jet’s debt has been at elevated levels (debt-equity ratio of 11, one of the highest among BSE 500 companies). While the deal with Etihad might not result in an immediate turnaround in Jet Airways’ financial performance, it will improve debt-equity to a manageable level of 3.8 and support its share price, thereby lessening the pain for shareholders. The downside to the deal is the nearly 32 per cent dilution in Jet’s equity capital (and in EPS proportionately). The sting from dilution, though, will be less given that Etihad is acquiring equity in Jet Airways at 31.5 per cent premium to its last closing price of Rs 573. This could spark a rally in Jet’s share price on Thursday. The deal price could also become a benchmark if Jet raises further equity in the near term.
The disappointment, however, is that the deal will not result in any open offer for minority shareholders. This may cap any potential short-term rally and also prove to be a dampener for traders who may have built-up positions hoping to tender shares at premium to Etihad. They may now have to wait for the deal to materialise into operational and financial gains for Jet to make their profits.

http://www.business-standard.com/article/markets/deal-to-be-a-game-changer-for-jet-airways-113042400652_1.html